What Is an Insurance EOB and How Does It Work?

An Explanation of Benefits (EOB) is a statement provided by your health insurance company after you receive medical care. It details how your medical claim was processed and what portion of the costs your insurer covered. The EOB serves as a comprehensive summary of the financial transactions between your healthcare provider, your insurance company, and you.

It is important to understand that an EOB is not a bill for services rendered. Instead, it outlines the original charges, the amount your insurance paid, and what, if anything, you might owe to the healthcare provider. You will receive a separate bill directly from your healthcare provider for any amount you are responsible for. This document helps you understand the financial breakdown of your healthcare services.

Key Sections of an EOB

An EOB typically includes several distinct sections that provide an overview of your medical visit and the insurance claim. One prominent section is patient information, which lists the name of the individual who received the medical services and their policy number.

Another key part details the healthcare provider’s information, including the name of the doctor, hospital, or clinic that delivered the services. The EOB also specifies the dates when the services were provided.

Furthermore, EOBs commonly include service codes or descriptions, which are standardized codes representing the procedures or treatments you received. A unique claim number or ID is also assigned to each processed claim. The type of service, such as an office visit, lab test, or prescription, is usually categorized.

Interpreting Financial Details

Understanding the financial breakdown on an EOB is essential for managing healthcare costs. The “billed amount” represents the total charge the healthcare provider submitted to your insurance company for the services. This initial amount is what the provider would charge before any insurance adjustments or negotiations.

The “allowed amount,” also known as the negotiated rate, is the maximum amount your insurance company will pay for a covered service. This figure is often lower than the billed amount due to agreements between the insurer and providers. Any difference between the billed and allowed amount, if you used an in-network provider, is typically a network saving.

Your “deductible” is the amount you must pay out-of-pocket for covered services before your insurance begins to pay its share. The EOB will indicate how much of the allowed amount was applied towards your deductible. A “copayment” (copay) is a fixed amount you pay for a covered health service, often due at the time of service, and it may not count towards your deductible.

“Coinsurance” is your share of the costs of a healthcare service, calculated as a percentage of the allowed amount, after you have met your deductible. For instance, if your coinsurance is 20% and the allowed amount is $100, you would pay $20. The EOB also clearly states the “amount paid by insurance.” Finally, the “patient responsibility” or “what you owe” section details the total amount you are responsible for paying. If a service was denied, the EOB may include denial codes or explanations.

What to Do After Receiving Your EOB

Upon receiving your EOB, a crucial step is to compare it with the bill you receive directly from your healthcare provider. This comparison helps ensure consistency between the two documents and verifies that the charges align. Discrepancies can occur, and reviewing both documents together helps identify potential billing errors.

You should also meticulously check the EOB for accuracy, confirming that the services listed, the dates of service, and your patient information match what you received. Verifying that only services you actually received are listed can help prevent billing fraud or identity theft. If you notice any services you did not receive, or incorrect coding, contact your health plan.

Understanding the “patient responsibility” amount on the EOB is important, as this is the amount you will likely be billed for by the provider. However, do not pay based solely on the EOB, as it is not a bill. Always wait for the official bill from your provider.

If you identify a discrepancy, if a service was denied incorrectly, or if you simply do not understand a detail, contact your insurance company’s customer service for clarification. Similarly, for billing errors or questions about services, reaching out to your healthcare provider’s billing department is appropriate. It is also advisable to keep your EOBs for your records, which can be useful for tracking healthcare expenses, potential tax purposes, or future reference.